HealthLeaders: One of the by-products of the Patient Protection and Affordable Care Act is this greater emphasis from the federal government on care coordination. Hospitals and physicians have been trying to create stronger alignment models for several years, and even with reform's stated goals about care coordination, what are the obstacles and perhaps new levels of uncertainty?

John Gillean, MD: Alignment still comes down to building relationships with physicians. The foundation you have to have is to develop a trusting relationship with them, something that we've not always been good at as hospital-based providers. At the same time, the opportunities for alignment are there because there can be more financial alignments that we didn't always have the capacity for in the past. Physicians today are more willing to participate in those financial arrangements than they might have been in the past. Changes in the reimbursement system are helping to drive those business relationships, particularly in cardiology. We have a lot of legal hurdles that we have to maneuver through. I'm hoping that one of the things that will come out of healthcare reform is they'll go back and revisit some of those restrictions and see if there are ways to allow the collaboration to occur more fluidly. Right now there's still a lot of artificiality in how you have to create those arrangements.

Sam Civello: One thing to be aware of is that for experienced physicians, some feel like they've heard it all before. They've bought and they've sold. This may not be their first go-round in terms of physician practice acquisitions and integration. So when they come to the table to talk about these things, they are going to be sensitive to what we can actually deliver for them. Physicians today know that changes are coming. They want a partner that's on top of the issues and can give them a solution that's equitable—whether that's an ACO, medical home, or other model that may be available. This is especially a focus on the primary care side. Physicians want to know how they fit into the long-term scheme of things while being both financially rewarded as well as part of the solution.

Gillean: When we did deals with medical groups in the past, the physician entrepreneurs' approach and the mind-set was that they were selling a business, but the organization was not really going to change the practice or the delivery of care. In the early days, I think a lot of us were guilty of doing these deals with the assumption that it was strictly a business deal; the physicians got a profit by selling the group, and the hospital would increase or protect market share. Today we're trying to change the mind-set of physicians joining us, and perhaps we are going to be a bit more selective. Physicians need to be aware that they are joining a larger organization and structure, so if they are not willing to give up their personal freedoms for the overall organizational structure, we need to deal with those physicians. That's part of the failure the industry had in the past. We told physicians they didn't have to change, and really they do have to change.

Tim Attebery: That's right. The new model is about the health system trying to deliver more value to the market. In the past these deals weren't market focused; they were health system focused. And that's always a mistake in business when you do things primarily only for your business and forget about the customer. The customer wants something, today. And what they want is more value in the healthcare we deliver. In order to do that, the physicians who integrate have to be told, "You have to be culturally accepting of a new way of doing business. Otherwise, you're a bad fit for this integration."

Clayton Harbeck: We get exposure to hospital and health systems around the country. And the hospital systems that think like THR, Wellmont, and CHRISTUS Health have a great chance of success in the new model. We see a large number of hospital systems that are trying to align physicians with the goal of driving admissions or reducing costs under the old model. If you do that, you won't get the quality metrics and patient satisfaction improvements required in the future. There are many systems still trying to work in the old model, which will lead to poor results.

HealthLeaders: To those points, we've talked a lot in the past about how to influence physicians and change their mindset, but what about the hospital or system CEO? How will he have to change his point of view to get gains in value that you're talking about?

Harbeck: There are three things we know about physicians: First is they're scientists. They've been trained classically to make decisions under a scientific method. The second is that they're very independent. And the third is that they're very competitive. I don't think that part of the physician makeup has changed. Even generationally, I think that's still true to a large degree. We believe that physicians can't be managed—that they need to be led. If you give physicians the right information at the right time with complete transparency, they will in a natural way modify their behaviors because they want to do the right things.

HealthLeaders: Clayton, a lot of these hospitals and systems with good intentions are going to attempt to get into business relationships with physicians to achieve alignment. We can predict that some of these aren't going to work out. What are the common mistakes that you see CEOs and their teams making?

Harbeck: The first error would be the starting point. If you haven't started, you're already late. You should have started down this path a couple years ago. The business model of alignment is a good business model and has been for 30 years. As an industry, we've just failed to execute. There has always been a need for this relationship with physicians, instead of the adversarial relationship we've created. With government incentives, a lot of systems have raced down the path to link clinically and have deployed EMRs. The boneyard is littered with failed attempts at that. Those attempts often fail because without a solid financial base for the practice, it's almost impossible to deploy a clinical solution. Our advice is always to get the business processes right first. That's everything from patient flow to activities of the employees of the practice and how they're integrated. All of that should be done first, with a solid practice management and a central business office concept or management services organization. Once those concepts are deployed, lay the clinical system on top and integrate those processes in the EMR. Deploying a clinical IT solution by itself is not going to align the physicians. And let's not forget that governance is absolutely the essential ingredient. Without a strong governance model and communication plan across the board, you run a high risk of failure.

Civello: The alignment solution has to be a physician-centric solution. Inside Texas Health Resources, we've made a conscious effort to focus on the physician group just as we would all the other entities. We are governed and run by our own president and leadership team. For example, our president is a physician who builds the relationship foundation with our providers, and our COO and CFO have spent much of their careers on the physician side of the business. When you start with a foundation that's physician-centric, I think you gain a lot of credibility that allows you to implement and build an organization with the right people, business processes, and carefully selected technologies.